5G Wireless Nibbles Away At Cable Industry’s Broadband Dominance

Thanks to their dominance over broadband access in the U.S., cable companies had spent the last decade seeing significant broadband subscriber growth each and every quarter, since, well, there weren't any other options. That ended during the second quarter of 2022, when companies like Comcast failed to add any new broadband subscribers for the first time in history.

All told, cable giants in the U.S. lost about 60,000 subscribers during the second quarter. Companies like Charter and Comcast used to be able to weather losses in cable TV subscribers due to broadband, but not anymore. Last quarter both companies saw losses on both fronts.

So what's happening?

For one, some telcos that have long skimped on fiber upgrades (most notably AT&T and Frontier) have finally realized that they should more meaningfully invest in the networks. Especially AT&T, which has doubled down on fiber upgrades after flinging untold billions of dollars at media megamergers that went absolutely nowhere. While telcos still lost 85,000 subscribers last quarter (mostly due to the ongoing exodus of annoyed DSL users), they're challenging cable with fiber in more locations.

But what appears to be truly upending the cable monopolies' good time is the growth in 5G and fixed wireless services; the only sector that saw meaningful broadband subscriber growth last quarter:

Fixed wireless/5G home Internet services from T-Mobile and Verizon added about 815,000 subscribers in 2Q 2022 - compared to about 120,000 net adds in 2Q 2021

While promising, there's still a long way to go before you could call U.S. broadband a healthy market.

Cable broadband providers still enjoy a comfortable monopoly in most markets and continue to dominate in market share. As of the end of the last quarter, U.S. cable providers had 75.6 million broadband subscribers, top wireline phone companies had roughly 32.2 million subscribers, and top fixed wireless services saw just 2.2 million subscribers.

With 5G fueling a lot of faster, better, fixed wireless solutions for the home, most of the current growth is in wireless. And while wireless is a great option for some, it often comes with various network restrictions and constraints, and is no substitute for affordable, future-proof fiber.

An estimated 83 million Americans still live under a broadband monopoly with the choice of just one broadband ISP, usually Comcast or Charter. Wireless and services like Starlink can help, but as we noted in our recent Copia report on broadband access, the deployment of affordable fiber by municipalities, cooperatives, and utilities is where the real potential for competitive disruption resides.

Enter the U.S. government, which is about to throw more than $50 billion in new subsidies at the broadband industry thanks to COVID relief and infrastructure bills. And as we've noted, the biggest and most politically powerful providers are working overtime trying to tilt the policy playing field to ensure that massive surge in funding goes to them, and not any of their smaller competitors.

While we're re-arranging the deck chairs somewhat, U.S. broadband remains a largely consolidated, heavily monopolized sector that's routinely protected by state and federal corruption. Wireless alone (which is itself increasingly consolidated) can't fix that.